93 Lesson 7: Advanced Invento ry in T ally .ERP 9 7.1 Order Processing Order Processing refers to placing orders with suppliers for purchasing from them or receiving orders from customers for the purpose of selling. In Tally.ERP 9, Order Processing is linked to Inventories. Using Order processing you can: Track the order position of a stock item; Know whether the goods ordered have arrived or not; Know whether the orders have been delivered on time and thNational Traderse reasons for the delay if any. In this lesson, you will learn the method of recording and linking purchase orders to purchase invoice and sales orders to sales invoices. You will also learn how to display outstanding orders and the effect of orders on stocks. Lesson Objectives On completion of this lesson, you will be able to Record orders placed/received Make a reorder analysis of inventory Create and maintain batch wise details, bill of materials and price lists Display reports on various stock valuation methods and inventory age- ing analysis Record zero valued entries Record transactions using different actual and billed quantities www.accountsarabia.com www.facebook.com/accountsarabia call Us:0530055606
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Order Processing refers to placing orders with suppliers for purchasing from them or receivingorders from customers for the purpose of selling.
In Tally.ERP 9, Order Processing is linked to Inventories. Using Order processing you can:
Track the order position of a stock item;
Know whether the goods ordered have arrived or not;
Know whether the orders have been delivered on time and thNational Traderse reasons forthe delay if any.
In this lesson, you will learn the method of recording and linking purchase orders to purchaseinvoice and sales orders to sales invoices. You will also learn how to display outstanding ordersand the effect of orders on stocks.
Lesson Objectives
On completion of this lesson, you will be able to
Record orders placed/received
Make a reorder analysis of inventory
Create and maintain batch wise details, bill of materials and price lists
Display reports on various stock valuation methods and inventory age-
ing analysis
Record zero valued entries
Record transactions using different actual and billed quantities
Ensure that you are at the Gateway of Tally of National Traders. In the F11: Features (Inven-tory Features)
, activate the following features: Allow Purchase Order Processing.
Allow Sales Order Processing.
Use Tracking Numbers (Delivery / Receipt Notes)
7.1.1 Purchase Order Processing
Raise a Purchase Order on 15-12-2009 on Navketan Bricks (vide Order No. 1) for 5,000 pcsof Bricks @ Rs.3 /brick. (Godown - Warehouse). The due date is 26-12-2009 and addtionalFreight charges @ 3% is applicable.
Setup:
Create a Supplier - Navketan Bricks Under Sundry Creditors with Maintain Balances
bill-by-bill set to Yes.
Create a Stock Item - Bricks under Building Materials Stock Group, and select Not
Applicable for the Stock category and specify the unit of measure as Pcs (If not listed cre-ate using Alt+C).
Press F12: Purchase Order Configuration and ensure that:
Accept Supplementary Details is set to No.
Complete Accounting Allocations in Order/Delivery Note is set to Yes.
Use Common Ledger for Item allocation is set to No.
Step 1: Create Purchase Order
Go to Gateway of Tally > Inventory Vouchers > F4: Purc. Order .
1. Date: 15-12-09.
2. Party's A/c Name: Navketan Bricks
3. Order No: 1 This particular Order No. field is an additional field to record the order number ifdifferent from the voucher number.
4. Name of the item: Bricks. Press Enter and the Item allocation sub-screen appears.
Due on: 26-12-09 (It is the due date for the delivery of the item. This will enable the moni-toring of outstanding deliveries. The order can be split for delivery on different dates).
Location: Warehouse. (Only when the multiple location feature is active, this field isrequired to be given, else it does not appear.)
Orders do not affect financial records nor do they update inventories.
In this section, set the Tracking Numbers to Not Applicable.
Quantity, Rate and Amount - 5,000 Pcs @ 3 per Pcs (The amount is calculated automat-ically but is modifiable to enable rounding off)
The completed Stock Item Allocation sub-screen appears as shown below :
Figure 7.1 Item Allocation for Bricks
5. Press Enter until you reach the Accounting Details screen.
Allocate the amount to Purchases ledger and return to the Purchase Order screen.
Press Enter on the blank field to take the cursor to the tax/ expense field.
6. Select Freight Charges at 3% on the item value.
7. Narration: Optional.
7.1.2 Altering a Purchase Order
To Alter a Purchase Order,
Go to Gateway of Tally > Display > Day Book > F4: Chg Vch and select Purchase Orders orGo to Gateway of Tally > Display > Inventory Books > Purchase Order Book.
Enter a Sales Order on 16-12-2009 on WinLab Technologies (vide Order No. WT/5) for 4,000
pcs (godown - Warehouse) of Bricks @ Rs. 5 /brick. The due date is 27-12-2009 and tax @17.5% is applicable.
Step1: Create Sales Order
Go to Gateway of Tally > Inventory Vouchers > F5: Sales Order .
1. Date: 16-12-09.
2. Party's A/c Name: WinLab Technologies
3. Order No: Enter WT/5 - The voucher number is automatically displayed here but you areallowed to change it, because this particular Order No. field is for the customer's order numberwhich is most likely to be different from the voucher number.
4. Name of the item: Bricks. Press Enter and the Item allocation sub-screen appears. Due on: 27-12-09. The due date for delivery of the item. This will enable monitoring of out-
standing deliveries. The order can be split for delivery on different dates.
Location: Warehouse.
Quantity, Rate and Amount – 4000 Pcs @ 5 per Pc allocate to Sales Account (create itif not present)
5. Press Enter on the blank field to take the cursor to the tax/ expense field.
6. Select Tax @ 17.5% (Create it under Duties & taxes to be charged on the total sales).
7. Type the narration as Sales Order entry as on 16th December 2009.
The completed Sales Order appears as shown below :
8. Press Y or Enter to accept the screen and return to the Gateway of Tally.
7.1.4 Altering a Sales Order
To Alter a Sales Order,
Go to Gateway of Tally > Display > Day Book > F4: Chg Vch and select Sales Orders or Go toGateway of Tally > Display > Inventory Books > Sales Order Book.
7.1.5 Display Order Position
Now that we have raised one purchase order and one sales order, let us view the order position toknow the amount of stock that is in the process of order both inward and outward:
Go to Gateway of Tally > Stock Summary.
Press the F7: Orders button or press Alt + F7.
Select Sales Orders Outstanding, set No to Use Due orders only?.
Select Building Materials field and drill down to the Order Details screen, by pressingenter twice.
In theSales Order Outstanding
screen. PressAlt+F1
to view the report in detailed for-mat.
The Order Details screen appears as shown below :
Figure 7.3 Order Details screen
The Order Details report is generated as on December 20, 2009. Change the period to a differentmonth and observe what happens. You will discover that the entry appears in the report based onthe due date given in the order.
Press F12: Configure and set Yes to all the fields.
The report now shows the Outstanding positions of the Sales and Purchase Orders for thestock item Bricks.
6. In the Receipt Details screen, select 1 from the List of Orders in the Order No(s) field andaccept the screen.
7. The stock item Bricks appears automatically. Press Enter and the Item Allocations sub-
screen is displayed with the quantity details.
8. Tracking number : Not Applicable (as goods are accompanying the bill) and re-accept theorder number.
9. Select Purchases in the Accounting Allocation screen.
10.Select Freight at 3% on the item values.
11.Enter the rest of the details and accept the screen.
Practice Exercise
1. Enter a sales invoice on 27-12-2009 and link it to the sales order of 16-12-2009 and view theOrders position (including the cleared orders).
2. Raise a Purchase Order on 20-12-2009 on Navketan Bricks with the order number - PO/001.Give the due date as 28-12-2009 and quantity as 4500 pcs (godown - Warehouse) @ Rs. 4per brick piece. Add Freight charges @ 3%.
3. Enter another Purchase Order on 26-12-2009 on Navketan Bricks with the order number asPO/002, due date as 31-12-2009 and quantity as 5500 pcs (godown - Warehouse) @ Rs. 4per Pc. Add Freight charges @ 3%.
4. On 22-12-2009 and 27-12-2009 raise two Sales Orders on WinLab Technologies (WT/001and WT/002). Give the due date as 29-12-2009 and 3-1-2010 and quantity as 3000 pcs and4,250 pcs respectively @ Rs. 6 per Pc. Tax @ 17.5% for both orders.
5. View the Order Position and then return to the Gateway of Tally.
7.2 Reorder LevelsReorder level is the level on reaching which an order has to be placed for a stock item. The impor-tance of a reorder level arises from the desire to have sufficient stocks to service customer ordersand at the same time not to have unnecessarily high stocks. Therefore, the points to be consid-ered in deciding reorder levels are:
Lead time for suppliers to deliver stock
Delivery time specified by the customer
The stock in hand to satisfy orders in the meantime.
7.2.1 Defining Reorder Levels
Reorder Levels can be defined in either Simple Mode or Advanced Mode.
Go to Gateway of Tally > Inventory Info. > Reorder Levels
Select Building Materials and press Enter
The Specify Reorder Levels screen appears where all the Stock Items (Bricks, Cementand Steel) under the Stock Group (Building Materials) are displayed.
The Inventory Reorder Status screen appears as shown below :
Figure 7.10 Inventory Reorder Status
Click the A: Reorder Only button (A: Reorder Only button toggles with the A: Show All
button).
Figure 7.11 Inventory Reorder Status
A report is displayed giving the details of only Bricks, since the report is configured to display onlythose items which are below the reorder level. To analysis the Inventory Reorder Status Report,place the cursor on any of the details given in the above report and press Enter . You can view thedetails to verify its correctness.
i. Name of Item
The list of stock items are displayed which are grouped under the selected
stock group. Highlight the required item and press Enter to arrive at the
Movement Inward details. This gives us the details of the stock items in
terms of the quantity, rate and value. You can drill down to the last level of
1. In Indus Enterprises experiment by giving your own values for reorder level and minimumorder quantity and observe the report as on various dates (depending on the entry dates). Dis-cover and analyse the stock status.
7.3 Tracking Numbers
Many businesses deliver stock with a delivery note or a challan and the bill is raised later. Theremay be a situation where you raise a bill first and then deliver the goods against the bill raised orreceive the goods against a purchase bill. In such cases, it is important to 'Track' the delivery orreceipt of inventory against the bill. Tally.ERP 9 has a feature called Tracking Numbers to achievethe same.
'Tracking' the delivery or receipt of inventory, is purely an inventory-related activity. Tally.ERP 9helps in bringing such entries into the accounting statements to help the user in ascertaining theprofit or loss for a stipulated period. In case sales bills are to be raised an additional element inthe detailed Profit & Loss statement appears as Sales bills pending and for Purchases the samewill appear as Purchase Bills pending.
7.3.1 Using Tracking NumbersOn 28-12-09 Ref GRN/NB - 1,000 Pcs of Bricks received from Navketan Bricks @ Rs. 4 /Pcat the warehouse.
In the earlier sections, we have recorded two Purchase Orders on 20-12-2009 and 25-12-2009with due dates 28-12-2009 and 31-12-2009 respectively. The above receipt of 1,000 pcs isreceived against the ordered quantity of 4,500 pcs.
viii. Minimum Order Quantity
The minimum order quantity is the level below which when the quantity ofstock falls, an order has to be placed. Press Enter on Minimum Order
Quantity to view the reorder level and minimum order quantity definition
screen of the selected stock item.
ix. Order to be Placed
The amount is arrived at based on the following interpretations:
Shortfall > Minimum Order Quantity . The quantity displayed in
Shortfall column will be displayed in the column Order to be Placed or
Shortfall < Minimum Order Quantity . The quantity displayed in Mini-
mum Order Quantity column will be displayed in the column Order to
be Placed.
In our example, Shortfall (750 pcs) is less than Minimum Order Quantity
(1500 pcs) hence, minimum order quantity of 1500 pcs is the order to be
Let us raise a Receipt Note for the PO/001 raised on 20-12-2009 with due date 28-12-2009.
Setup:
In the F11: Features (Inventory Features), activate Use Tracking Numbers to enable the Receipt Note (Goods Receipt Note) and Delivery
Note (Delivery Challan).
Use Rejection Notes to enter Rejections In vouchers and Rejections Out vouchers.
Step 1: Create Receipt Note
Go to Gateway of Tally > Inventory Vouchers >F9: Receipt Note.
1. Date: 28-12-09
2. Party's A/c Name: Navketan Bricks
3. Purchase Ledger : Project Purchases
4. Name of the item: Bricks
5. In Item Allocations for screen, Select Tracking No. as GRN/NB, Order No. as PO/001 andDue on: 28-12-09
6. In the main voucher screen, enter 3% for Freight charges and the value gets calculated auto-matically.
7. Enter the remaining details and accept the voucher.
7.3.2 Display Purchase Bill Pending
Go to Gateway of Tally > Display > Statements of Inventory > Purchase Bills Pending >
Press Alt + F1 for a detailed view.
The Purchase Bills Pending report appears as shown below :
Figure 7.12 Purchase Bills Pending
Tally.ERP 9 tracks down the details of goods received for which bills have not been received. Toview effect of above report,
Go to Gateway of Tally > Profit & Loss Account and view the Purchase Accounts.
You will find that the value of goods received (recorded through Receipt Note) are included in thePurchase Accounts under Purchase Bills to come, for ascertaining the profits accurately. Also
view Sundry Creditors from Balance Sheet, you will find that liability is created under PurchaseBills to come.
On 28-12-09, you receive the purchase Bill No. NB/15 from Navketan Bricks for theirDelivery Note No. GRN/NB for 1,000 Pcs of Bricks @ Rs.4 /Pc. A credit of 30 days isallowed.
Setup :
Activate Cost Centre for Freight charges Ledger
Step 1: Create Purchase Voucher
Go to Gateway of Tally> Accounting Vouchers > F9: Purchase
1. Ref : NB/15
2. Credit Navketan Bricks: Rs. 4,120
3. Bill-wise Details: NB/15 30 days 4,120
4. Debit Purchases: Rs. 4,000
5. Tracking Number : Select GRN/NB and give the required inventory allocation.
6. Debit Freight Charges: Rs. 120 7. Select Projects and Assignments Category and Buildings Cost centre
8. Accept the Purchase voucher .
After completing the above entry, view Purchase Bills Pending.
Practice Exercise
Make the following voucher entries:
1. On 1-2-2010, you received an order from FirstCom Solutions for 25 Nos of HP - 27 PrinterCartridges to be delivered on 15-2-2010 @ Rs. 250 each. Order number FCS/9. You propose
to deliver from On-Site, allocate to Sales-Printer, Cost Centre Amar.
2. On 13-2-2010, received 22 Nos of HP - 27 Printer Cartridges @ Rs. 200 from Power LineComputers and stored in On-Site. The invoice PLC12 was also received. Credit period was 30days.
3. On 15-2-2010, National Traders delivered 20 Nos of HP - 27 Printer Cartridges from On-Siteto FirstCom Solutions against their Order FCS/9.
Since you will raise the invoice later, give a new tracking number as Ex1.
Ensure that in F11: Features (Accounting Features), Integerate
Accounts with Inventory is set to Yes.
For details on Original Quantity , drill down the Purchase Bills
pending and activate the option Show Original Quantity in F12:
Configure. You will get an additional field called Initial Quantity.
The terms are Credit period of 45 days from the date of invoice. The sale price is Rs. 250each. No interest is to be charged.
4. On 17-2-2010,FirstCom Solutions
returned 2 defective pcs ofHP - 27 Printer Cartridges
,track it against Ex1.
5. On 1-3-2010, National Traders raised the invoice for the 18 pcs of goods retained by FirstComSolutions. Link the invoice with the delivery note.
Display Sales Bills Pending on 28-2-2010. and view Profit & Loss A/c on 28-2-2010 toview changes in Sales Bills to make.
Change the date to 2-3-2010 and check, are there any Sales Bills to Make
6. Prepare a Purchase invoice on 13-2-2010 and track it against the receipt note dated 13-2-2010.
7.4 Batch-wise Details
Batch details are used to identify the movement of inventory in batches or lots. Although this is arequirement primarily of the pharmaceutical industry, the same can be used by other industriesthat maintain or manufacture perishable goods. Many organisations also purchase in batches inorder to monitor the result of the batch purchased individually. Hence, Tally.ERP 9 has used theterm Batch/Lot.
Batches/Lots are also often used to monitor the date of manufacture, date of receipt or the date ofexpected time when it cannot be further used (perished or expired). Tally.ERP 9 makes provisionsto enter both the manufacturing date and the expiry date to take decisions as required.
In this section the following topics are discussed :
Activate Batch-wise Details and enter vouchers using them.
Activate Rejection Notes in the F11: Features (Inventory features),if not activated.
Create a Receipt Note for Exercise 2, and give the tracking number as
PLC12.
For Exercise 4, create Rejections In Voucher
For Exercise 5 , raise a Invoice for 18 Pcs only.
After completing the above practical exercises, return to Gateway of
Tally and disable tracking numbers in the F11: Features (Inventory
Features).
Once entries are recorded using Rejections In and Rejections Out Notes,
the option Use Rejection Inward/Outward Notes in F11: Features (Inven-
Batch-wise details are given for maintaining batch information pertaining to stock items. The Man-ufacturing date and expiry date can also be set for batch wise details.
To activate Batchwise Details,
Go to Gateway of Tally > press F11: Features (Inventory Features).
Set Maintain Batch-wise details and set Expiry Dates for Batches to Yes.
7.4.2 Using Batch-wise Details in Purchase Invoice
On 15-12-09, purchased Saridon - 250 nos from GetWell Pharmacy @ 5.50 each with batch
number ST/101 having Manufacturing date as 15-8-2009 and Expiry Date as 14-8-2010.
Setup:
Create GetWell Pharmacy Ledger under Sundry Creditors
Create the following Stock Item
Name: Saridon
Under : Medicines (create the group under primary)
Category: Pain Killers (create the category under primary).
Maintain in Batches: Yes.
Track date of Mfg: Yes Use expiry dates: Yes
Alter Standard Rates: No
Rate of Duty: 5
Retain all the other fields as default and accept the stock item creation screen.
Return to the Gateway of Tally.
Manufacturing Date & Expiry Date for Batches is useful for busi-
nesses that deal in goods that have expiry dates like medicines, food
and other perishables.
During Voucher entry, the date of manufacture of the product, by
default takes the date of the voucher, this can however be changed
subject to
Date of Manufacture is not later than the Voucher Date.
Expiry Date is not earlier than the Date of Manufacture.
Tally.ERP 9 does not display batch ST/102 when we make the entry on 1-1-2010 because theexpiry date of ST/102 was 31-12-2009. But when we changed the entry date to 31-12-2009 thebatch is displayed! This is because the option Honor Expiry Dates usage for Batches is set to Yes in the F12: Configuration.
7.5 Additional Cost Details
The cost of an item is the rate at which the item is purchased. However, there are other expenseslike Packing charges, Freight charges, Cartage incurred, etc. which add to the cost of purchasingthe item. Thus, the additional cost details are required to be added to the actual cost of purchase.
Let us now see how Tally.ERP 9 handles this requirement.
When Honor Expiry Dates usage for Batches is set to Yes in the F12:
Configuration, Tally.ERP 9 does not allow selection of expired batches
during voucher entry (i.e., Batches for which, the expiry dates falls before
Ensure that you are at the Gateway of Tally of National Traders.
Press F11: Features (Inventory Features), set Track Additional Costs of Purchases to Yes.
7.5.2 Creating Purchase Voucher with Additional Cost Details
Setup :
Create a ledger – Stationery House under Sundry Creditors with only the bill-wisedetails set to Yes.
Create the following stock items:
Create a new group Expenses on Purchases under the default group Purchase
Accounts and select Not Applicable for Method to Allocate when used in Purchase
Invoice.
Create the following ledgers under the newly created group Expenses on Purchases withthe option Inventory Values are Affected and Maintain Cost centres set to No.
Packing Charges on Purchases
Cartage Charges
Step 1:Create Purchase Voucher
Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
1. Press Ctrl+V for Voucher Mode
2. Date: 1-3-2010
3. Credit Stationery House: Rs. 7,500
4. Debit Purchases: Rs. 7,500 and press Enter
5. Tally.ERP 9 prompts for the Item details (as Inventory values are affected is set to Yes)
6. Select item Stapler and press Enter
7. In the Item allocation screen,
Name of Item Under Category Units Maintain in Batches
Stapler Primary Not Applicable Nos NoStapler Pins Primary Not Applicable Nos No
The option Method to Allocate, when used in Purchase Invoice will not
appear, if the feature Enter Purchases in Invoice format is set to No in
In the entry dated 1-3-2010, we gave the additional cost details for each item (Stapler and Stapler
Pins). This additional cost was calculated and added to the cost of the item. The additional costsare not added to the cost of the items, when the entry is made in the invoice format.
To appropriate the additional costs to purchase invoice of 3-3-2010,
Go to Gateway of Tally > Accounts Info. > Groups > Single > Alter
Select Expenses on Purchases
The screen appears as shown below:
Figure 7.22 Group Alteration
Select Appropriate by Qty from the Allocation Methods list.
Accept the screen and return to the Gateway of Tally Similarly, select the option Appropriate by Qty in the Purchase Accounts group also.
The option Method to Allocate when used in Purchase Invoice allows
you to apportion or appropriate or allocate additional cost details entered in
Invoice mode, based on the purchase value or purchase quantity.
To use the Appropriate by Qty option, ensure that the items in the
1. Enter a purchase invoice on 15-10-2009 for 10 Nos of Item One @ Rs. 100 each and 20 nosof Item Two - @ Rs. 200 each from the Supplier.
Setup :
Create two stock items Item One and Item Two with the unit of measure as nos.
Create the ledgers - Supplier (Sundry Creditors), Delivery Charges on Purchases andTax on Purchases (under Purchase Accounts).
Alter the group Purchase Accounts and select Appropriate by Value as the method ofappropriation.
7.6 Bill of Materials (BoM)
A Bill is termed as an authenticated document for the materials which are taken out from the stockeither for sale or for transfer to other godowns or for manufacturing, etc. In order to avoid this con-tinuous process of issuing a bill at every stage, a system has been evolved wherein the items withtheir quantity details can be allotted towards manufacturing a certain product or by-product. Thisfacilitates the immediate reduction in stock of the item automatically. This process of listing theitems that make up another item is termed as the Bill of Materials (BoM).
7.6.1 Creating Bill of Materials
You can create a Bill of Material (BoM) for any stock item. Typically, a BoM can be created at thetime of manufacturing/ assembling the item. You may specify a BoM at the time of creating a stockitem or altering its master.
National Traders is engaged also in the business of assembling and manufacturing Televisions.
Enter a purchase invoice on 15-10-2009, select party as Supplier and
select Item One - 10 nos at Rs. 100 each and Item Two - 20 nos atRs. 200 each.
Select Delivery Charges on Purchases and Tax on Purchases ledg-
ers and enter the amounts as Rs. 50 and Rs. 250 respectively and
accept the entry.
View the Stock Item report.
After completing the above exercise, in F11: Features (Inventory
Features) disable the option Track Additional Cost of Purchases.
The total purchase invoice value amounted to Rs. 1,15,500. The above goods are stored in On-Site. A Cheque was paid from Bank Account immediately.
On the same day, 5 Nos ofTelevision Flatoron
is manufactured inOn Site
godown. Additionalexpenses of Rs. 3,000 and Rs. 2,000 was incurred towards Wages and Power respectively.
Step 1: Create Purchase Invoice
Go to Gateway of Tally > Inventory Vouchers > F9: Purchase
1. Select the Party as Star Electronics
2. Allocate to Purchases Account
3. Select the items with the quantity and standard rates as given in the table above
4. Select the Godown as Onsite
5. Accept the entry
Step 2: Create Manufacturing Journal
Go to Gateway of Tally > Inventory Vouchers > Alt+F7: Stock Journal.
1. Select the Manufacturing Journal and ensure that the date is 21-12-2009.
2. Under the Name of Product to be manufactured, type Television Flatoron (you will notice theitems given in the master as Bill of Materials appear automatically).
3. Manufacture it in On-Site.
4. Quantity to be manufactured - 5 (you will notice the rates of the items appear automatically).
5. Under Additional Cost Components, specify additional cost of Wages - 3,000 and Power -2,000 (If the ledger accounts for these expenses do not exist, create them under DirectExpenses).
Under Components (consumption) the items to be used in proportionatequantity for manufacturing Television Flatoron is picked up automatically
from the stock item master. The default location as specified in the BoM is
also given for each component. The standard cost is picked up for each
item. Tally.ERP 9 also allows you to alter these details.
The additional costs entered for the ledgers, do not reflect in the relevant
ledgers with the amount but only add to the cost of the item.
Create a BOM for stock item Computer which requires the following items.
Hard Disk Drive - 1 Nos
Floppy Disk Drive - 1 Nos
CPU - 1 Nos
Monitor - 1 Nos
Keyboard - 1 Nos
Mouse - 1 Nos
Store them in the Bangalore godown.
7.7 Price Levels and Price Lists
A Price List refers to a list of items maintained by an organisation along with their price details. Aprice list is generally used by organisations which deal in multiple products. Price Lists are main-tained in various structures for different types of buyers (customers), viz., Wholesalers, Dealers,Retailers, etc. The price list is structured based on the classification of buyers and is referred to atthe time of making sales. Whenever the sale prices change (on the basis of time), the changesreflect in the Price List also. In case of bulk sales, discounts can also be given to the buyers.
Let us now see how Tally.ERP 9 handles such a situation through the Price List feature.
7.7.1 Activating Price Lists and Defining Price Levels
Setup:
Go to Gateway of Tally > F11: Features (Inventory Features)
Set Use Multiple Price Levels for Invoicing to Yes. (This will appear only if the featureAllow Invoicing is set to Yes.)
Name of the Item Qty
Hard Disk Drive 1 Nos
Floppy Disk Drive 1 Nos
CPU 1 Nos
Monitor 1 Nos
Keyboard 1 Nos
Mouse 1 Nos
Enter a manufacturing journal to indicate the consumption of goods at the
Create a New customer called Beltron Computers with the following details.
In the F11: Features (Inventory Features) activate Separate discount column on
invoices.
Step 1: Create Sales Invoice
1. On 2-1-10 raise a sales Invoice on Beltron Computers
2. Select the stock item USB Pen Drives 100MB from On-site
3. Specify quantity as 30 nos.
4. Rate and discount automatically appears as Rs. 1,250 and 7.5% respectively (as the requiredprice level is selected in the ledger master of Beltron Computers).
5. Ignore negative stock and allocate to Sales- Components
6. Select Amar as Cost Centre.
7. Now, select another item - Sound Card
8. Type the quantity as 10 nos (here in this case, the cursor prompts in the Rate field since pricelists is not defined for this item)
9. Specify Rs. 100 as Rate
10.Press Enter to skip the discount field
11.Allocate to Sales- Components and select Amar as Cost Centre.12.Give the bill-wise details as required and accept the entry
Step 2: Create Sales InvoiceOn 5-1-10 raise a sales Invoice on Beltron Computers for the following Items :
The Invoice amounted to Rs. 41,500.
1. Similar to invoice dated 2-1-10 select the item USB Pen Drives 100MB
3. Rate as Rs. 1,500 and discount of 10% appears automatically (as we have defined it in thePrice List dated 3-1-10)
4. Ignore the negative stock and allocate to Sales- Components. Select Amar as Cost Centre.
5. Accept the quantity details of the USB Pen Drives 100MB stock item
6. Select another item, Sound Card and give the quantity as 10 nos7. Specify Rs.100 as the Rate.
8. Tally.ERP 9 prompts for the discount information. Let us leave it blank (you already know thatyou can specify as required or simply leave it blank).
9. Allocate to Sales- Components ledger
10.Give the bill-wise details as required.
11.Accept the entry
7.8 Stock Valuation
As per accounting rules, the final results of a company's working depend on the valuation ofinventory (stocks). As per norms, there are many concepts of evaluating the company's stock.Tally.ERP 9 goes one step ahead, by providing all the required stock valuation methods for you tochoose from. In addition, Tally.ERP 9 allows you to choose different valuation methods fordifferent items.
7.8.1 Stock Valuation Methods
The Stock Valuation / Costing Methods provided in Tally.ERP 9 are:
Tally.ERP 9 automatically applies the Price list for the specific period. For
example, when we entered the invoice as on 2-1-10, Tally.ERP 9 displayed
the discount percentage as 7.5% and as on 5-1-10, 10% is displayed.
The party details, item details, and quantity details provided are the same,
different rates have been taken automatically by only changing the date of
the invoice.
After completing the above exercise, go to Gateway of Tally > F11:
Features (Inventory Features) and set Separate Discount column on
In addition, Tally.ERP 9 provides the following Market Valuation Methods:
At Zero Price
Average price
Last Sale Price
Std. Price
Depending on the Market Valuation Method defined in the stock item master, Tally.ERP 9displays the rate/ price automatically at the time of Invoice entry. The Market Valuation Methodis set as Average Price by default. The Average Price displays the average of all the salesprices given in the previous sales entries, as the selling rate/ price while the current sales entry isbeing made.
Let us now examine the result of the different stock valuation methods.
7.8.2 Display Stock Summary
Setup :
The selection of an appropriate stock valuation/ costing method is essential
as this helps in knowing the value of the closing stock for a specified daterange based on the purchase rates/ cost.
The valuation of Closing Stock is done based on the Costing / Stock
Valuation Methods and is not based on the Market Valuation Methods.
Go to Gateway of Tally > F12: Configure > Accts / Inventory Info.
Set Allow Advanced Entries in Masters in Inventory Masters to Yes.
Go to Gateway of Tally > Inventory Info. > Stock Item > Alter , Select HP - 27 Printer Cartridges, you will find that the details of Costing Method and
Market Valuation Method under Behaviour
Select Average Cost and Average price respectively
Accept the master information.
Go to Gateway of Tally > Stock Summary,
Select Printers Stock Group
Press F2: Period and change the period from 1-07-2009 to 31-07-2009.
Click Auto Column (Alt + N) button and select Stock Valuation Methods.
The closing balance of stock as per Default and FIFO stock valuation methods are shown below :
Figure 7.35 Stock Summary
Tally.ERP 9 displays the closing stock of 6 nos of HP - 27 Printer Cartridges as per differentstock valuation methods. Since there are 11 columns in the report the same is displayed in sixscreens as shown below:
Alt+R – This is a special key combination in Tally.ERP 9 used for hid-
ing the line (row).
Alt+U – This is a special key combination which brings back the THE
LAST hidden line (row) which was hidden using Alt+R.
Alt+S – This special key combination brings back ALL the hidden lines
The closing balance of stock as per Monthly Avg. Cost and the Last Sale Price (Monthly Avg.Cost is repeated) stock valuation methods are shown below:
Figure 7.40 Stock Summary
Let us now discover how the above figures are calculated. To analyse the same, press Enter onthe Default column till you reach the report displaying the vouchers. The screen appears asshown below :
Figure 7.41 Stock Vouchers
We have a purchase entry first, followed by a sale and again another purchase and a sales entryas given below:
Purchased 10 nos HP - 27 Printer Cartridges @ Rs. 850 = Rs. 8,500
Sold 5 nos HP - 27 Printer Cartridges @ Rs. 1,150 = Rs. 5,750
Purchased 5 nos HP - 27 Printer Cartridges @ Rs. 850 = Rs. 4,250
Sold 4 nos HP - 27 Printer Cartridges at Rs. 1150= Rs. 4600
We have purchased a total of 15 nos for Rs. 12750. The average now is Rs. 12,750 / 15 = Rs.850 with a closing balance of 6 nos x 850 = Rs. 5,100 (Average cost method of valuation)
FIFO
FIFO Stands for First-In-First-Out. This is one of the systems of costing
where the value is calculated after an outward (consumption or sale) is
made for the first purchase entry. The outwards consumption is taken from
the stock that is purchased first.
LIFO Perpetual & LIFO Annual
LIFO stands for Last-In-First-Out which means that the outwards (consump-
tion or sale) quantity is taken out from the stock that is purchased last.
LIFO Annual: All the entries of the current financial or specified year
are considered. LIFO Perpetual: All the entries of the company i.e from the books
beginning date specified while the creation of a company are consid-
ered.
For example: Suppose a company's books begin on 1-4-2009 and the data
is present till 31-3-2010. LIFO Perpetual considers the entries from 1-4-
2009 onwards, whereas LIFO Annual considers the entries for the year
selected/ current year.
Average Cost & Average Price
Average Cost is calculated after each purchase or sale entry for whole year.
Total Inward Value/Total Inward Quantity = Average Cost
Average Price is the average of all the outward entries which are displayed
at the time of recording a new sales entry.
At Zero Cost
The stock is valued at zero cost.
Last Purchase Cost / Sale Price
Last Purchase Cost : The stock is valued based on the last purchase
cost given in the Purchase entry.
Last Sale price: The stock is valued based on the last sales price
given in the Sales entry.
Monthly Avg. Cost
This is the Average Cost where the period is month-wise. Tally.ERP 9 calcu-
lates the average value after each purchase or sale for the whole month.
Standard Cost
Standard Cost is a pre-determined cost, based on which you would like to
value your closing stock. The standard cost details have to be given in the
You can decide which method of stock valuation is most appropriate for your business andaccordingly define that in the item master. FIFO (First In First Out) and Average Cost are themost popular stock valuation methods used in today’s business.
7.9 Zero Valued Entries
Zero valued entries in vouchers are required when, for example: you need to despatch inventoryas free samples or free replacements, etc.
You can make an entry of issue with the required quantity details but enter the value as zero. Thisis done so that the entry is reflected only in the Inventory books and not in the Accounting books.
7.9.1 Creating Zero Valued Entries
On 28-02-10, make a Sales invoice on Prism fabrication for 1 Nos of Television Flatoron
without value.
Setup:
In National Traders,
Activate the feature Allow Zero valued entries in the F11: Features (Inventory Fea-
tures) and accept the other settings.
Create a ledger account Samples under the group Sales Accounts and set Cost Centres
are applicable to No and Inventory values are affected to Yes.
Create Sales Invoice1. Raise a sales invoice dated 28-02-10 on Prism fabrication for 1 Television Flatoron with no
value.
2. Price levels is to be set as Not applicable
3. Allocate it to Samples
After passing the above zero valued entries, if you display the Sales Register you may not findthis entry. But however, if you display the Television Flatoron Stock Item, you will find thequantity sold.
Zero valued entries do not reflect in accounting books but affect only our
Experiment by choosing different ageing styles and observe the changes in the report.
Practice Exercise1. Select By Mfg. Date as Ageing Style and view the report as on 31-12-2009.
7.11 Different Actual and Billed Quantities
The need for different actual and billed quantities may arise in several instances. For example ifan extra inventory is sent to cover up for any stock that reaches in a damaged condition orInventory sent as extra samples or the Stock is despatched to the customer as quantity discount.
Setup:
Ensure that you are in the Gateway of Tally of National Traders.
Go to F11: Features (Inventory Features) and set Use Different Actual & Billed Qty to Yes.
7.11.1 Using different Actual and Billed Quantities
Go to Gateway of Tally > Accounting Vouchers > F8: Sales. You will notice that the Quantitiescolumn is divided into two columns, viz. Actual and Billed.
You can view Inventory ageing report based on the following AgeingStyles :
By Date of Purchase
By Expiry Date
By Mfg. Date
To Be Expired
Monthwise Inward/Outwad Quantity Report : Press Enter on Total
Quantity to view the month-wise inward , outward and closing
quantity report.
Item Inward Details : Press Enter on any of the Ageing Period col-
umns to view the Item Inward Details. This report shows the inwardmovement of the item for the date range calculated from the age
period. Ageing Analysis is done for the stock-in-hand based on when
they were purchased. Hence, while viewing the Ageing Analysis
Report, the Item Inwards details statement is very useful and relevant.
It provides further information of aged stock like date of purchase and
supplier. It also provides a drill down facility to the actual transaction
On 3-3-2010, make a purchase invoice from Parvathi Stockers for the following items :
Setup :
Create a new stock item as Rice with the following details :
Group it under stock group Foodstuffs.
Stock category - Not Applicable
Unit of Measure - kgs (kilos) with decimal places - 3 (create if not present). Accept the master creation without any opening balance and return to the Gateway of
Tally.
Step 1 : Create Purchase Invoice
1. Enter a Purchase invoice on 3-3-2010 on Parvathi stockers.
2. Price level - Not Applicable
3. Select Rice under Name of Item
4. Order number - Not Applicable
5. Select the godown as Onsite
6. Type Actual Quantity as 100 kgs and Billed Quantity as 90 kgs7. Specify the Rate as Rs. 10 and the value appears as Rs. 900 (billed quantity * rate). The
screen appears as shown below :
Figure 7.43 Item Allocations for Rice
8. Allocate to Purchases ledger and press Enter .
Select another item Wheat and enter the following details
Type Actual and Billed quantity - 50 bags Specify Rate as Rs. 100, the amount is defaulted as Rs. 5,000
9. Press Enter and accept the purchase invoice with the default bill-wise details.The Purchaseinvoice amounts to Rs. 5,900 (Rice - Rs. 900 and Wheat - Rs. 5,000).
Step 3 : Display Stock Summary
Go to Gateway of Tally > Stock Summary
Select Foodstuffs as stock group and press Enter
Figure 7.44 Stock Summary
Tally.ERP 9 displays 100 kgs of Rice stock item because this is the quantity that we have actuallyreceived from the party. In case of Wheat the quantity appears as 150 kgs.
Go to Gateway of Tally > Display > Account Books > Purchase Register
Select March month Press F12: Value button,
Specify the range as Voucher - Having - Ledgers - With - Name - Containing - Par-vathi stockers (party name in purchase entry of 5-3-2010)
Press Enter .
Press Alt+F1 to display the stock summary in detailed format
Press F12: Configure and activate the option Show Inventory Details also
Tally.ERP 9 displays Voucher Register as shown below :
The inventory details display 90 kgs for the stock item Rice, because this is the quantity that theparty has billed us for. (We have received 100 kgs of Rice i.e, the actual quantity. We will bemaking the payment for only 90 kgs i.e., the billed quantity). Therefore, the actual quantity affects
the inventory books while the billed quantity reflects in the accounting books.